Hillenbrand Inc. is moving deeper into the plastics machinery business with a 79 million euro ($82.8 million) deal for recycling equipment specialist Herbold Meckesheim GmbH.
Herbold, based in Meckesheim, Germany, makes recycling systems that include washing, separating, drying, shredding and pulverizing equipment.
Annual sales for Herbold top 50 million euros ($52.4 million), and the deal is expected to close in the fourth quarter of this year.
"Expanding our offering in recycling technologies is one of our strategic growth initiatives and we believe this acquisition will help us continue to grow our recycling business across the entire recycling value chain from size reduction, washing, separation and drying, through material handling, feeding, extrusion and pelletizing to build a full recycling system," Hillenbrand CEO Kim Ryan said in an email interview.
Hillenbrand, based in Batesville, Ind., will use available cash as well as borrowing capacity in the company's existing revolving credit line to make the purchase.
The company sees synergies between its existing Coperion line of business and Herbold to provide expanded recycling equipment offerings to the market, which Ryan described as having attractive, long-term growth prospects.
"Herbold Meckesheim has a strong reputation in the recycling industry and offers equipment and solutions that are complementary to the solutions offered under our Coperion brand. Together, Coperion and Herbold Meckesheim will have strong manufacturing and engineering operations across Europe, Asia and North America," Ryan said.
The move for Herbold comes as companies and their customers are looking for more and more recycled plastic content.
"Customers, consumers and regulators are demanding an increase in recycling. The desire for more sustainable solutions such as recycled or bio-based materials creates significant opportunity for Hillenbrand," she said.
"We are well positioned to meet the growing demand for these applications because of our ability to deliver solutions that produce technically advanced materials with high quality and high output," Ryan said.
The new owner expects to improve Herbold's performance by bringing its operating model and global sales and service capabilities.
Purchasing Herbold is the latest in a series of acquisitions that have positioned Hillenbrand as a name in the plastics equipment market. Most notably, the company purchased Milacron Holdings Corp. in a $1.9 billion deal for the maker of injection molding machines in 2019.
Hillenbrand, a publicly traded company that has its roots in casket making and still operates in that segment, said the acquisition will add to adjusted earnings per share within the first full year following completion of the deal.
Herbold will join with Hillenbrand's Coperion and Rotex brands in the firm's Advanced Process Solutions segment, which focuses on highly engineered industrial processing solutions and aftermarket parts and services, the company said.
Coperion makes equipment for compounding and extrusion, feeding and weighing and bulk material handling and provides service. Rotex makes screeners and separators.
Ryan, meanwhile, provided some perspective on how Hillenbrand approaches the acquisition market these days.
"Our top priority for capital continues to be strategic investments to drive profitable growth in our industrial product platforms, including strategic bolt-on M&A opportunities that we expect will accelerate our growth and provide appropriate returns to our base business but also targeted in some of these very attractive long-term growth end markets like recycling," she said.
"But we're also looking at emerging end markets in the areas of food, continuous battery production and biopolymers, where we're looking to build out our capabilities and move more quickly into what we believe will be very attractive end markets in the future. There is a lot of opportunity in the market currently, and we have an active pipeline we are assessing for strategic fit and long-term growth opportunities," Ryan said.
The sale to Hillenbrand will end four generations and nearly 140 years of family control for Herbold, which dates to 1884 when Adam Herbold established a millwright shop. Brothers Karlheinz Herbold and Werner Herbold have been in charge since 1978.
Operations include 220 workers and a production facility measuring about 108,000 square feet (10,000 square meters) in Meckesheim.
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